Fitch upgrades Seven Energy

Fitch Ratings said it upgraded Seven Energy International Ltd.'s long-term issuer default rating to CC from RD (restricted default) following completion of the consent solicitation for the company's $300 million 10¼% senior secured notes due 2021.

Fitch also said it affirmed wholly owned subsidiary Seven Energy Finance Ltd.'s $300 million senior secured notes at C with a RR6 recovery rating.

Following the completion of a distressed-debt exchange in December 2016, Seven Energy may choose to pay interest on the notes in kind for up to four coupon payments between Oct. 11, 2016 and April 11, 2018, subject to certain conditions, the agency explained.

However, the company’s short-term liquidity remains extremely weak due to accumulated accounts receivables for sold natural gas, a limited ability to convert naira into dollars, Fitch said, and the ongoing Forcados export pipeline closure since February 2016.

The agency said the company’s management has taken steps to improve the company's liquidity, but the current debt structure may be unsustainable and a default of some kind is probable.

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